Financial

It is that time again, the dreaded Tax Season. I really don’t know, other than some CPAs that enjoy tax season. For most, they just try to do what is right and pay what they owe. Some like to try to get as big of a return back as possible, but for me I like to break even.

So with that, you have less than 1 month before taxes are due. Plan ahead, if you are doing your taxes yourself, see what changes have been made to the tax codes. If you are like me and can’t be bothered or even comprehend the tax codes, pay a good CPA, in the end it is worth the money.

I’ve been in constant contact with my CPA for the past several months, ensuring that we had everything together, but more importantly, I’ve really focused for the last year on giving more. I really want to plan on giving more and more each year. My family has been incredibly blessed and there are a lot of suffering families out there, so if we can give to the Food Bank, to a local charity that the money will be given to help others, then that is what I want to do. So for 2014, I’ve increased our giving by $100 in our monthly budget, this does not include the $40 a month that I give through automatic withdraw in my paycheck bi-weekly.

As we pay down debt and move closer to those magic words of being DEBT FREE, we will increase our giving. Because there is no greater feeling, than helping someone else.

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Truly a 4 letter word that I can no longer wait to never use again. As I blogged about a few weeks ago, you can ready about it here, my wife and I started using the Dave Ramsey budgeting tool and honestly, I took a stab in the dark on a few things, i.e. Gas and Food, but I have to stay for our 1st month, I was able to notice a few trends:

1) I wasn’t that far off with my guess for Gas. I budgeted $400 and we spent $425.
2) I budgeted $500 for groceries and we spent $550.

Not bad, right? I had over budgeted on a few things, i.e. I built in $100 for Doctor visits, but we didn’t use that, so we were still within budget. But what really came from this budget, was a sense of responsibility and more importantly, encouragement, because not only did we stay within our budget, 3 other things came from our 1st month of budgeting:

1) We gave more in January than we did last year to charity.
2) We did not eat out as much, because we did over spend in our grocery spend, we were able to cook more and take more for our lunches, which also reduced our eating out and saved us $25 from what I had budgeted.
3) We paid an additional $250 last month towards paying off our debt.

DEBT is a really bad word and one that I would encourage everyone to focus on getting out of and never using the word again. I’ve had numerous conversations with a close friend that is in the Financial industry regarding the Dave Ramsey plan at the end of the day, I asked him one question and it was one that he couldn’t answer and here it is: “If I am able to get out of debt in 2 years, does it matter if I follow the principles of Dave Ramsey or someone else?” And he simply smiled and said no. My point is, I like Dave Ramsey’s plan, it makes sense to me and is giving me and my family a path to follow to get out of debt. We didn’t get in debt overnight and we had a lot of fun getting in debt, but it is going to take sacrifices to change those habits and get out of debt.

My wife and I have had a lot of conversations lately around debt, but more importantly our future and out future looks a lot more clearer and brighter knowing that there is a light at the end of the tunnel.

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A new year , a new tactic in helping get our finances under control.  I’ve listened to Dave Ramsey for years and figured that even though I was able to knock out 2 credit cards last year, maybe I need help getting to the finish line?

So today, I signed up for the Dave Ramsey My Total Money Makeover.  I have taken the time to get our remaining credit cards listed with the software and it was not as bleak as I thought. And more importantly, I think that even though it is going to be a hard journey to push through the remainder of debt, we didn’t get there over night and we certainly aren’t getting out of debt tomorrow, unless we win the lottery. So, for $90 a year, it was worth to be able to really be able to see and track where our money is going and visually see when our debts will be paid for.  I really think that this is going to be a great tool for my family to get ahead.

So My Total Money Makeover, here we come. I am ready to stand in the lobby of Dave Ramsey and scream that we are debt free.  Is now the time for you and your family to get some extra step, to help you over the hump?

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It always seems to happen when you least expect it, because families are not able to really plan for a rainy day fund. And lord knows, if they have to replace a car, it makes it even harder.
Well, we are now in that situation. My wife’s SUV is done. The transmission is slipping and the cost to replace the transmission doesn’t warrant putting the money back into it, as the return wouldn’t pay off.
So, we are bitting the bullet and have been looking at, lord help me, mini vans.

I have to state for the record that I’m an SUV guy. I like them, the way that they drive, the storage, etc. I realize that a mini van makes sense with kids, but let’s be honest, most guys would chose an SUV any day over a mini van. I’ve spent a lot of time this week emailing car salesmen about a new car and talking pricing, mileage, safety, etc.  And I think that I’ve narrowed the search down to two mini vans.  They are literally the same, except some features and one has 19,000 more miles than the other. The price is also obviously higher for the lower mileage mini van too. But, I learning that I have to not have much say in the car, other than how much we can spend.

And at the end of the day, it is my wife’s mini van, and she will be the one driving it the most and really the most important thing is that she and the boys are safe.

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A little tip for when traveling, use Gift Cards. I am a big fan of trying local restaurants when traveling, but if you have a lot of gift cards, why not save a little money?On our last trip, we were able to eat out 4 times using gift cards, which meant that we saved almost $120, if not more.  So using the gift cards not only saves money, but it is a very thrifty way to travel and save money.

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The Debt Update

3 credit cards have been paid off or down to a near to zero balance.

Now, the focus is being shifted to the other accounts and taking the money that was going towards those 3 accounts and piling it on the other accounts.

We are keeping our heads down and just trying to plow through the debt that is left over.  I am already feeling better about our financial situation and more importantly, were are going.

 

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Saving Money

In this day in time, where credit card debt has risen, I think that it is important to start teach children financial responsibility.  My wife and I have started setting aside $50 a month, per child and putting it into their bank account. Yes, we did establish a bank account for our children, and we did so for multiple reasons:

1) It is a credit union and we could get them established as members very early on.
2) If we put a minimum of $50 a month, for 1 year, that is $600 a year. If we maintain this pattern, they will have $7,200 per child after 16 years.  *This is not factoring in any interest.
3) We are encouraging others to donate to our boys, instead of giving them toys, that will only increase their bank account.
4) We are teaching the boys financial responsibility and really encouraging them to save for their future.

In a day and time where families are spending money at a rapid pace, teaching the boys the importance of saving money at an early age, is so important.

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When my dad started driving, the cost of gas was $0.16 a gallon. When I started driving, the cost of gas was $0.89 a gallon. Today, 20 years later, the cost of gas is between $3.50 – $4.00 plus, depending on where you live, with a national average of $3.66 a gallon. So what has changed?

This article does a great job of summing up the reason, read here.  But the bigger question is not why, but what are we going to do about it? The reality comes down to two things, 1) oil speculators and 2) alternative sources of fuel.

Until there is additional restrictions placed on the oil speculators, the price of gas is going to be in a state of influx and more importantly, will remain high. And fuel alternatives have been in the works for years, bu the demand has not reached the point for car companies to build a mass quantity of cars that will run on fuel alternatives. Hybrids have not taken off as economists expected. Natural gas is an interesting alternative, which has a lot of potential, however, there are not enough natural gas stations, which causes a problem. And then there is always the always unpopular idea of drilling in the Anwr in Alaska. This would take time to get setup and running, but read here the benefits.

Bottom line, something has to be done. Regardless of what your political beliefs are, an alternative has to be created, because higher gas prices are and will continue to have an effect on our cost of goods. Which in return, means less money in your pocket and less for your family.

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MoneyEven though we are years away from having to even think about a weekly allowance for our boys, I was recently asked what I thought about and more importantly, what we were going to do for our boys?  So, I asked my mom how when I was a kid, what she and my father did with me for an allowance. I honestly don’t remember getting an allowance when I was a child, I am a firm believer of paying kids for work that they do, not just give money away every week, just because.

When the boys are of age, I am guessing 8 or so, we will sit them, give them a list of chores and once they are completed, at the end of the week we will give them a set amount of money. The chores will probably range from taking out the trash, clearing the dinner table, keeping their rooms cleaned, etc. I want their allowance to be not about the money, but about learning to take responsibility.

Dave Ramsey has a great article on this same topic, that also follows this same thought process.

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I can not tell you how many times that my father and my grand father have told me to save today and not to count on having Social Security benefits available to me when I retire.  I am trying to take the necessary steps today planning for my future and for the future of my family. Here is what I am currently doing to ensure that we are financially set for the long haul, and not factoring in Social Security benefits into the equation.

  1. Pay off debt – this will allow for more money to be put in our savings and money market accounts.
  2. Invest – Even though I have stopped by individual stocks for now, I am investing about 8% of my current salary and my employer puts in an additional 2%. So, about 10% of my current salary is going into my 401 and I am hoping to have that up to about 15% in 2 years. I try with each pay raise to add at least 1 – 2% to my investment. And, to simplify my investment, I went with a target date fund, based on my year of retirement, so the fund managers will automatically adjust the holdings as needed each year. Going from more of an aggressive holding now, to a less aggressive and risky holdings the closer that I get to retirement.
  3. Save for college tuition – The more that we can save over the next 18 years, the better off that not only my wife and I will be, but more importantly, the boys will need to borrow that much less. I would like to be able to pay for the majority of their college tuition so that the boys can go to college without going into debt.
  4. Social Security – Though I am not factoring this  into my retirement, I did go to Social Security Estimation of Benefits to see that if I wait and work until I am 70, that my monthly take home will be over $2,800. However, if I retire and start drawing Social Security at the age of 67, then my monthly payment will be $2,100.

Planning for the future is important and I am a web developer, not a financial planner. So, if you have questions as it pertains to your financial goals, take the necessary steps to get the best information for you and your family. Here are two local resources:

Our children will have enough to deal with as they become adults, I would like to try to help them and teach them that it is ok to save and more importantly, how saving today can give them so much more in the future.

 

 

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